Annual Review 2023-24
Contents
- About this Annual Review
- Year at a glance
- Board Chair message
- Chief Executive Officer and Chief Ombudsman message
- Organisational overview
- Complaints
- Who complained to AFCA in 2023–24?
- AFCA Engagement with First Nations peoples
- Overview of complaints
- Open cases
- Closed cases
- Banking and finance complaints
- Buy now pay later
- Scam complaints
- Financial difficulty complaints
- Small business complaints
- General insurance complaints
- Significant events
- Life insurance complaints
- Superannuation complaints
- Investments and advice complaints
- Cryptocurrency
- Complaints lodged by consumer advocates and financial counsellors
- Complaints outside AFCA’s Rules
- Systemic issues
- AFCA’s Code compliance and monitoring function
- Engagement, awareness and accessibility
- Corporate information
- AFCA General Purpose Financial Report
- Glossary
Between 1 July 2023 and 30 June 2024
Life insurance complaints received
Top five life insurance complaints received by product
|
Product |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Income protection |
530 |
575 |
650 |
523 |
540 |
|
Term life |
331 |
290 |
359 |
347 |
310 |
|
Total and permanent disability (TPD) |
179 |
184 |
227 |
210 |
224 |
|
Whole of life |
59 |
115 |
231 |
231 |
117 |
|
Funeral plans |
162 |
169 |
880 |
441 |
109 |
Top five life insurance complaints received by issue
|
Issue |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Delay in claim handling |
155 |
172 |
204 |
245 |
231 |
|
Incorrect premiums |
181 |
213 |
286 |
209 |
176 |
|
Denial of claim |
270 |
212 |
171 |
145 |
165 |
|
Claim amount |
131 |
95 |
112 |
141 |
111 |
|
Cancellation of policy |
107 |
92 |
150 |
131 |
94 |
Life insurance complaints closed
Average time to close a life insurance complaint in days¹
Stage at which life insurance complaints closed
|
Stage |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
At registration |
497 |
513 |
603 |
529 |
514 |
|
At case management |
853 |
698 |
718 |
666 |
634 |
|
At rules review |
151 |
104 |
186 |
125 |
109 |
|
Decision |
209 |
280 |
383 |
148 |
154 |
Time taken to close life insurance complaints
|
Time |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Closed in 0-30 days |
173 |
154 |
222 |
197 |
204 |
|
Closed in 31-60 days |
405 |
361 |
444 |
405 |
397 |
|
Closed in 61-180 days |
769 |
715 |
781 |
589 |
474 |
|
Closed in 181-365 days |
328 |
289 |
347 |
223 |
262 |
|
Closed in more than 365 days |
35 |
76 |
96 |
54 |
74 |
¹ This excludes complaints that were inactive for an extended period, for example, complaints that were paused because the financial firm was insolvent or due to court proceedings, and complaints that were previously closed and then re-opened.
Key complaint trends
Complaint closure rates show a modest decline
AFCA closed 1,411 life insurance complaints in 2023-24, marking a 4% decrease from the previous year.
Improvements in resolution time
Notable progress was made in resolution times, with 14% of complaints resolved within 0-30 days. Additionally, 28% of complaints were settled within 31-60 days, and 34% were resolved in 61-180 days.
Extended resolution times increase
Complaints taking over 365 days to resolve increased by 37%. The rise in complaints taking over 365 days is linked to the increasing complexity of cases, often due to the age of the insurance products in question and additional time needed for parties to provide submissions
Resolution and timeframes
Complaint closure rates show a modest decline
AFCA closed 1,411 life insurance complaints in 2023-24, marking a 4% decrease from the previous year.
Improvements in resolution times
Notable progress was made in resolution times, with 14% of complaints resolved within 0-30 days, reflecting a 4% improvement. Additionally, 28% of complaints were settled within 31-60 days, and 34% were resolved in 61-180 days.
Extended resolution times increase
Complaints taking over 365 days to resolve increased from 54 to 74. The rise in complaints taking over 365 days is linked to the increasing complexity of cases, often due to the age of the insurance products in question and additional time needed for parties to provide submissions.
Industry trends and challenges
Small but significant
Although life insurance complaints are a smaller segment of AFCA’s overall caseload, they are significant due to the complexities often involved. Disputes frequently arise over claim denials, policy exclusions and delays in processing claims. Consumers often struggle with understanding policy terms, leading to misunderstandings and complaints when claims are made.
Challenges in claim processing and policy terms
Complaints about claim denials often stem from individuals facing significant life events or medical issues, adding stress to an already challenging situation. Rising life insurance costs and cost-of-living pressures are contributing to an increase in disputes, especially regarding policy cancellations due to non-payment of premiums.
Sector under scrutiny for transparency and communication
The Australian life insurance sector faces heightened scrutiny over transparency and claims handling. Consumers have expressed frustration with perceived communication gaps and lack of clarity, particularly during times of illness or financial hardship. Effective resolution of these complaints is crucial.
Document retention remains a critical issue
Ongoing complaints highlight the importance of insurers maintaining comprehensive records, including applications, underwriting files, disclosure documents and policies. Issues with document retention have led to disputes and should be managed effectively.
Case study – Navigating policy discrepancies
Background
The complainant held an income protection policy that included lifetime benefits. However, the insurer stated that if a disability developed after age 55, the benefit percentage would be reduced, and if the disability occurred after age 64, the benefits would cease entirely.
Complaint
The complainant stated that they were unaware of the policy conditions, claiming that the insurer’s documentation did not clearly present them.
During AFCA’s investigation, the insurer was only able to provide a sample policy, which was not specific to the complainant’s case. This sample conflicted with the annual schedules and the Customer Information Brochure (CIB). The CIB indicated that a full lifetime benefit was payable if a disability occurred before age 56, while the policy stipulated that benefits would reduce after age 55.
Furthermore, the CIB suggested a reduced lifetime benefit would apply if disability started before age 65, whereas the policy stated that no benefits would be provided for disabilities that began after age 64. The annual schedules further complicated matters by indicating a lifetime benefit for both sickness and injury, even beyond age 65.
Outcome
After a thorough review, the panel ruled that the insurer should provide the complainant with the full benefit amount until the policy’s expiry date, rather than limiting the payments to the age of 65 as initially indicated by some of the policy documents.
This decision considered the various conflicting documents provided by the insurer and that the insurer had only been able to provide a sample policy as evidence.
The panel’s ruling aimed to ensure that the complainant received fair treatment and benefits in line with the intended coverage of the policy.
Case study – Acceptable levels of inconvenience associated with insurance claims
Background
The complainant held two insurance policies with the financial firm (insurer) for their spouse. Following the spouse’s death, the complainant filed claims under both policies. The insurer paid out the benefits along with interest, but the complainant sought compensation for non-financial loss, citing distress and inconvenience during the claims process.
Complaint
The complainant argued that they were entitled to compensation for non-financial loss due to the stress experienced throughout the claims process. Despite receiving the policy benefits and interest payments, the complainant felt that the delays and frustration justified an award for non-financial loss.
Outcome
AFCA reviewed the case and determined that the complainant was not entitled to compensation for non-financial loss. Although the complainant experienced some frustration, AFCA found that the delays in processing the claims were not unreasonable. The insurer had provided advance benefits promptly and had obtained the necessary medical evidence to process the claims.
AFCA’s decision was guided by our approach to non-financial loss compensation, which takes into account the typical stress and inconvenience associated with insurance claims. The insurer had already paid interest for the delayed payments and was not required to take further action.
In summary, AFCA ruled in favour of the insurer, concluding that there were no grounds for additional compensation beyond what had already been provided.
